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Friday, 26 August 2016

When normally silent and invisible figures like Lord Rothschild publicly express their 'concern' over the Keynesian unbacked paper fiat-money experiment by Central Banks (and very 'privately' increase their Gold investments like he just did) maybe it's time to start "paying attention."

By "paying attention" I ask what are "paper" promises (IOU's) going to be 'worth' in any one of these three likely economic scenarios?*

- Deflation, Stagflation, Hyperinflation.

*I'm NOT holding out any hope of a return to normal business and private sector cycles absent central-planning manipulation or corrupt crony "rigging" any time soon.

By "physical" I do not mean tugging-on the old sweats and going to the gym or for a run around the block, I mean hard assets like precious metals, oil & gas, real estate....tangible things. Those with serious wealth to protect have already moved into antiques and art as well.

The attached 2016 YTD chart of returns on assets is my point. Silver is in the #2 spot with a +36.6% return, and Gold is at #4 with a +26.19% return. Oil (WTI) shows a +9.61% return and NatGas +7.38% return.

- In a ZIRP and NIRP economic environment, how does that compare with returns on Certificates of Deposit or Bonds? [zero interest rate policy; negative interest rate policy]

- How about holding good old CASH? The return YTD for holding USD is -4.61% (not factoring-in an inflation rate of 8-10% on top of that). OUCH.